Pharmaceutical Companies Are Happy – Old People Are Buying Drugs

OK, I’m not talking about illicit drugs. There are not many arrest reports for 60-somethings trolling the streets for crack cocaine, although the Baby Boomers are making marijuana arrests a more common occurrence.

Instead, I’m referring to the incredible increase in pharmaceutical use that happens as people age past 55, particularly in the 65 to 75-year old range.

This trend is well known. It has been discussed in a million publications. You’ve no doubt heard, many times, how big drug companies are set to make a killing (no pun intended) in the years ahead.

So why do we care?

We care because it’s not about the drugs. It’s not about the pharmaceutical companies …

This is about consumers doing things en masse, in very predictable ways… and how this allows us to forecast what they will do next. This demand curve illustrates my point beautifully…

What you see here is one of thousands of demand curves we’ve created and use to stay ahead of the curve in hundreds of different industries.

Armed with this knowledge, the sky is the limit when it comes to running a business, buying or selling real estate, choosing a career and, of course, investing.

The key is: understand what drives people to buy.

Governments want you, as a consumer, to steadily increase your spending as you get older. They want you to hit the familiar milestones like purchasing a car and buying a house.

The government wants you to use credit to keep up your spending, even when your income suffers. By doing this, you help the economy remain on a steady path higher.

If you falter, you screw up the system. That’s when the government tries to persuade you to fall back into line. It uses lower interest rates, tax incentives, reduced income on savings – anything it can conceive of to get you to move your money (be it saved or borrowed) into the economic grindstone.

But today we are at a point where people are simply not complying. They don’t want more “stuff.” In fact, they want less of something – debt.

The reality is that the largest group in our economy, the Boomers, has turned the economic corner. They’ve moved from their highest point of spending to their peak saving years. As such, they’re no longer adding to the growth of the economy.

The government keeps trying to prod them along, but to no avail!

These consumers are not responding because it doesn’t fit what they need in their personal lives. It doesn’t matter what the government wants for the economy as a whole.

We know this and have been talking to audiences and readers about it, for more than two decades, through our publications, our books, our media appearances and at our Demographics School seminars!

We saw these changes happening years before they occurred.

The good news is that things are constantly changing! So we use our research to pinpoint predictable consumer spending and then combine it with population trends to see what different groups will do for many years to come.

We know when beach real estate will boom again.

We have a bead on the next trend in employment.

We certainly have a forecast for what types of investments people should hold.

All of this comes out of our research on how people spend combined with the size of different groups in our economy. It’s like having a trail map in a forest. There is lot going on, but there is definitely a clear path forward!

And it all starts with seeing how and when people buy things like drugs and potato chips and motorcycles.

Are you buying the chemical compounds contained in the pill? Are you buying the research and development that was necessary to bring the pill to market? Or are you buying the brand name printed on the bottle?

“Market bubbles are often a mass delusion, where investors wrongly assume that prices move in only one direction – UP! And nowhere is this delusion clearer than in real estate,” says economist… Read More>>

Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University.